Share Option Taxation
Successive governments have recognised the benefits
to the economy of motivating employees by offering tax incentives
for them to hold shares in their employer company. This has lead
to increases in the use of share options, as part of the standard
remuneration package for key employees. This is particularly so
in and around Cambridge, where the booming hi-tec and pharmaceutical
industries are at the forefront of this change.
The taxation of these transactions, upon the options
being granted, exercised, and upon the eventual share sale, can
be complicated. Depending upon the precise circumstances, the
taxpayer will need to consider his/her liability to:
Many of the individuals who hold such options are
globally mobile. This can lead to further tax considerations involving
residence and domicile issues. Some taxpayers, who have previously
not been required to complete a tax return, will need to consider
their legal obligations to now disclose these share option transactions
to the Inland Revenue.
Disclosing and then agreeing your share option tax
liability with the Inland Revenue is principally achieved by the
completing and filing of various pages of a self assessment tax
return. Clients who are fearful that these disclosures may be
investigated by the Inland Revenue may wish to consider taking
fee protection insurance.
Understanding this complicated tax system and paying
the minimum amount of tax, at the correct time, through the correct
mechanism, is what most clients seek. Speak to our tax specialists
and put your mind at ease. We may even be able to suggest ways
to restructure your affairs to save further tax.
Practical Examples of our Share Option Tax Expertise
- Transferring share options to a spouse.
- General tax advice for high net worth individuals who
have large gains on share options.